April 10, 2014

Nobody Blames Doctors for High Medical Costs. That's About to Change.

Policy wonks across the country were pretty excited on Wednesday. You should be too—particularly if you think health care in America has gotten too expensive.

The reason for the celebration was a massive release of government data—an Excel spreadsheet with literally ten million rows, give or take a few thousand. Inside those boxes you can find information about how much Medicare has been paying individual doctors for particular services.

The Center for Medicare and Medicaid Services (CMS) has always had such data. But, in 1979, a federal court prohibited the government from releasing it publicly. Then, last year, another federal judge issued a new ruling effectively rescinding that ban, clearing the way for the government to make the information public. Now it is. Anybody can look at up what his or her doctor has been billing Medicare. Perhaps more important, researchers can use the data to provide broader, aggregate looks at how the largest insurance program in America—one that the taxpayers finance—is paying for medical care.

One thing that’s likely to come out, as people pore over the data, is that there’s a lot of waste in American medical care. And while that’s not exactly news, the news is about to become more accurate—and specific. Most Americans think drug companies and insurers are the main reasons health care in the U.S. is so expensive. But, as any economist will tell you, the whole health care industry plays a role—including the medical profession. And while some Americans might be aware of this, few have made the connection to individual doctors. That could change now. The public is about to learn about some doctor in the Dallas-Fort Worth area who keeps on ordering all those scans for those migraine sufferers, even though the evidence is clear it's unnecessary—or some surgeon from South Florida who's performed a statistically improbable amount of knee replacements.

The medical profession has always fought these kinds of disclosure, fearing that the information, taken out of context, will create more misimpressions than it corrects. It’s not a crazy fear. A doctor who performs what seems like a lot of procedures or charges what seems like a lot of money isn’t necessarily providing bad care or bilking the taxpayers. It all depends on a ton of variables that won’t be immediately apparent from the data.

But the potential upside of disclosure is substantial. One possibility is that releasing the data shames some providers into more responsible behavior. As Amitabh Chandra, an economist and professor of public health at Harvard, suggested, fear of bad publicity might cause some higher-charging doctors to cut back on their reimbursements. And while individual consumers are unlikely to spend much time investigating doctors, professional researchers in the media and in academia will.

In fact, they already are. Initial reporting from the Wall Street Journal indicated that the top 1% of providers accounted for 14% of Medicare billing, with ophthalmologists making up roughly one-third of the top 1,000 billers. A report from the Department of Health and Human Services’ inspector general argued that the agency should scrutinize that specialty more closely, and this data shows why. The New York Times on Wednesday reported that two Florida physicians who had the highest Medicare reimbursements in the country were also generous donors to the Democratic Party. CMS hopes to encourage more such investigating, and not just from professional reporters. It has sponsored a contest for coders, calling on them to take the data and render it in a form that’s usable and interesting. The winner gets $20,000.

Insurers could use the data, too—utilizing CMS’s data in conjunction with their own to weed out bad actors and potentially reduce payments. Of course, the big insurers already have plenty of data on their own, so it’s not clear how much help this extra information will provide. And that’s one reason some wonder just how big a deal this particular release will turn out to be. “Information disclosure is a common regulatory tool,” Nicholas Bagley, a law professor at the University of Michigan and blogger at The Incidental Economist, wrote on Tuesday. “It’s been studied a lot. And in most settings, it just doesn’t work.”

But Bagley made clear he thought the release was a good idea—at the very least, he notes, it can help inform health policy debates. Even if transparency about physician billing may not cure the disease of rising health care costs, it can be part of the treatment.

Images via Shutterstock.

Darius Tahir is a Washington, D.C. writer for "The Gray Sheet." He has previously written for The Atlantic, National Journal and Modern Healthcare.